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Toll Free Calls and Telecommunications Tariffs

The telecommunications industry has utilized numerous contracts and types of phone numbers in order to provide services. Among these are toll free numbers and the telecommunications tariff. Toll free numbers are a useful marketing tool that allows subscribers to receive calls from customers, without customers paying the standard associated calling fees. Operators handle these calls in a variety of ways, depending on whether the customer is calling from a domestic or an international location. With the advent of new technology, many of these services no longer use a human operator, and instead rely on electronic operator programs. The telecommunications tariff governs the relationship between telecommunications companies and customers. Special tariffs permit telecommunications companies to charge amounts that deviate from the norm, contingent on government approval.

Toll free numbers are a type of phone number that callers may dial in order to receive certain information or services, without paying the traditional service fee that is associated with a call. In the United States, these are traditionally numbers that start with “500”, “700”, “800”, or “900”. As of 2013, toll free numbers are limited to those that that begin with “800”, “888”, “866”, or “855” (Federal Communications Commission 2013). These numbers are not attached to any geographic location. Having a toll free number also provides companies that have purchased these numbers with a unique set of feature. Many times, the company may easily track information related to calls, such as call times and phone numbers that were used to make the call. The subscriber can also utilize call blocking to limit access to its number to a certain geographical region (Rajat et al. 1996).

These unique features have proven to be one of the most valuable aspects of the toll free number service. Not only do businesses get extensive business intelligence, they can also utilize cloud-based services to manage the information, and control where their calls must be routed; this facilitates operations for businesses that have many working locations. In the last decade, the vast majority of phone service providers no longer charge for long distance calls in the United States. Additionally, many customers have comprehensive phone plans, and the existence of a toll-free number no longer incentivizes customers to call. However, the additional features that toll- free numbers provide have ensured that businesses still view the additional cost of obtaining a toll free number as worthwhile. With over 24 million toll free numbers currently in use in the US, these numbers will continue to be a significant part of business culture (Goldberg 2012; SMS/800 2008).“

Responsible Organizations” or “RespOrgs,” who regulate the toll free number issuing process, assign these numbers. These entities access the SMS/800 database, which lists all toll-free numbers. The FCC establishes regulation that determines under what conditions a toll free number may be obtained by a qualified entity. Number may not be hoarded or warehoused – they must be actively used by the entities that purchase them. Additionally, an entity without “RespOrg” status may not sell a toll free number to another entity (Federal Communications Commission 2013).

In order for a call to a toll free number to be completed, the call must be routed. This ensures that the call reaches its intended destination. First, the Service Switch Point determines that a number is toll free due to its number prefix. This then leads to a connection to the Service Control Point, which is able to provide the routing instructions that must be followed. Then, the toll-free number is translated into a standard geographic number, and the call is connected (Federal Communications Commission 2013).

The way that a toll-free number is handled depends on whether it is a domestic or interexchange call. Most countries are divided into regions called exchanges, and within each exchange a local telephone company handles all phone services. Intraexchange calls, which do not leave the individual region, would be managed by the individual local telephone company. However, those that cross exchanges – such as a call that originates in one country and is made to another country – are referred to as interexchange calls. These are typically managed by the country’s respective Telecommunication Administration, which routes the call as is appropriate (Rajat et al. 1996).

Operators can assist in this process in a variety of way. These operators are available 24 hours a day, 7 days a week, and may be either live or automated. However, an operator no longer routinely manages calls – a customer must call a number that features operator assistance, such as 1-800-CALL-ATT. The operator assists in managing the call by enabling a customer to call collect, to bill a third number, to connect you to a specific person within a larger business, to dial the call directly for you, or to provide the time and charges associated with your Operator Assisted call. Innovative phone networks now handle the majority of features that were traditionally managed by an operator (AT&T 2013). As of 1994, there was no way for callers from countries outside the US to handle US-based toll-free calls. However, AT&T filed a patent to extend access to the toll-free system to non-US-based callers. This patent system did not involve an operator, it operated through automatic recognition of international toll-free calls (Rajat et al. 1996).

An operator is available to provide directory assistance for customers wishing to find out the phone number that corresponded to certain goods and services. This service is provided by AT&T under the Federal Communication Commission’s rule 47, C.F.R. 63.71 and section 214(a) of the Communications Act of 1934, 47 U.S.C. 214(a). AT&T was able to provide this service by accessing its Directory Assistance Database. AT&T requested that this service be discontinued as of March 31, 2000, as there were other reasonable substitutes that could provide toll free directory assistance. AT&T found that in light of the increased availability of substitutes, the high cost of providing the service did not justify its declining value. However, the service remains active to this date (Federal Communications Commission 1999). This service is free to consumers, though not all toll-free numbers are listed in the directory. The Federal Communications Commission (FCC) hopes to expand its directory provision services to other competitors, who will utilize a 1-888-555-XXXX number to provide these services (Federal Communications Commission 2013).

Telecommunications tariffs provide conditions on the relationship between telecommunications agencies and customers. Since telecommunication companies are primarily businesses, they may not have customers’ best interests at heart, and may not provide adequate information for customers to make an informed decision. In order to fill this gap, telecommunication tariffs are documents that publicly disclose rates and fees for services. These must be filed with government regulatory agencies.

These telecommunications tariffs originated with the advent of public phone service. In these times, the services provided were less complex, and customers were able to simply read the tariffs to understand how much they would be charged for each type of call. Additionally, only a few telecommunication industries participated in the market, facilitating decision-making. As the market became increasingly competitive, the need for regulation decreased. In 2001, the FCC declared the telecommunications market was fully competitive in the United States, and eliminated the need to file tariffs with federal regulatory agencies. However, to continue operating, many state and local governments still require telecommunications tariffs (Telanalysis 2011).

As smaller companies entered the market, the FCC did not require these companies publish their tariffs. The FCC wanted to prevent collusion that would lead to continued artificially elevated pricing. However, the larger carriers found it difficult to compete with these smaller companies, who often would offer customers lower prices. Only the smaller companies enjoyed the benefit of special tariffs, while so-called ‘dominant carriers’ were restricted to charging customers more because of their tariff agreements. In light of this situation, AT&T began to apply for special tariff filings, arguing that it was necessary in order to stay competitive (Brotman 1995).

These special tariffs were still binding contracts, though they differed from the publicly available contracts. Special tariffs may also apply to services that are notconsidered a part of the ordinary telephone market, such as emergency calls, free calls, and premium rate calls. Emergency call and free calls occur without charge, while premium rate calls are used for services that wish to charge higher rates, such as competitions or information services. These contracts can only occur in the United States through special applications to the Federal Communications Commission to exempt the company from Tariff 12 Rates (Arnold 1989). In recent years, special tariffs have been used to target low usage long-distance subscribers. These can increase service coverage and profitability for companies that wish to offer these special tariffs (Wireline 2007). When Internet services were primarily accessed through modems, some countries offered special tariffs to educational institutions that wished to access the Internet using their phone service (The Campaign for Unmetered Telecommunications 1999).

Special tariffs are also provided in some countries to individuals who are elderly, low income, or in rural areas. These are meant to encourage universal service and facilitate day-to-day activities through the provision of phone services. The United States utilizes targeted small-scale programs, such as Link-up and Lifeline. The United Kingdom uses similar programs to target underserved populations, named “low user” schemes. Some countries additionally provide concessions based on certain criteria for eligibility. Turkey provides very low-cost services and some free calls to underserved populations. Spain provides those who are retired or receiving benefits from the state with a special tariff plan. Belgium offers social tariffs to all eligible customers, and mandates that all telecommunications companies pay into a fund to offset the costs of these social tariff plans. Australia has created an “Access for Everyone” plan that targets underserved populations. Hungary has established a special tariff for subscribers with a low income (Kibar 2007).

The telecommunications industry has evolved as new technologies have become widespread. However, throughout these changes, toll-free numbers have remained an important service that businesses employ in order to increase profitability. Although customers may no longer benefit from the cost-saving aspects of the toll-free call, these special numbers offer business intelligence opportunities that have remained popular with businesses. On the other hand, tariffs have changed extensively in the United States. While a few companies dominated the market, tariffs were essentially universal, and there were few special tariffs. As the market became deregulated and more competitors emerged, special tariffs became more common. Many other countries offer special tariffs to increase accessibility to telecommunications services for under served populations.